This study will analyze the relationship between small area variations in Medicare hospitalization rates and rates of inappropriate (i.e., medically unnecessary) hospitalization. The main question addressed is whether higher rates of inappropriateness are important in explaining why some areas have higher hospitalization rates for some conditions. The study will be based on analysis of Medicare hospitalization rates by condition for small areas in Massachusetts over a five year period. The longitudinal nature of the data will permit the use of improved methodological approaches to identify how much of the observed variability between areas is due to systematic differences in rates between areas. Conditions will be ranked in terms of their between-area variability and, for each condition, areas ranked in terms of their hospitalization rates. Up to 6 diagnostic conditions will be selected, 3 with high, 2 with moderate and 1 with low variability, plus a sample of medicine and surgery cases irrespective of specific condition. For each condition, some areas will be selected with high hospitalization rates, some with intermediate rates and some with low rates. A sample of Medicare hospital admissions from each area will be identified for medical record review based on the proportion of the area's admissions that go to a particular hospital. A modified version of the Appropriateness Evaluation Protocol (AEP) will then be used to screen sampled cases for inappropriateness. The AEP is a widely used criteria-based instrument whose reliability and validity have been documented. PRO nurse reviewers will perform initial medical record reviews. Cases identified as inappropriate by the AEP reviews will be evaluated by physicians. Information will also be collected on selected socio-economic and demographic characteristics of the population in each small area (e.g., mortality rates, income, education) and health system supply characteristics (e.g., hospital beds, nursing home beds, physicians). Multiple regression models will be used to analyze how area hospitalization rates are related to inappropriateness rates both before and after differences in population and supply characteristics are taken into account. This study should help clarify the extent to which higher hospitalization rates are associated with inappropriate use of the hospital.